Video Games: A Growth Story Plays Out
Ten years ago, a week in the life of an avid video-gamer went something like this: drive to a local video game retailer and spend $60 to pick up the latest Call of Duty, play through and beat the game in single-player mode, then resell it to the store a couple weeks later for $20 to fund the purchase of another game. Fast forward to today, and the state of play has changed dramatically, which Goldman Sachs Research sees creating significant growth opportunities for publishers.
Games can be downloaded directly to consoles, and the amount of time and money spent on single titles is increasing. "Publishers have shifted to a long-term engagement model made possible by online, multi-player game play," says Goldman Sachs Research's video games analyst Chris Merwin. "Major franchises now offer regular content updates to keep players engaged and spending on things like virtual goods that enhance gameplay." The rise of mobile gaming and live "eSports" video game competitions should only strengthen revenue predictably for the sector, making it a long-term growth story to watch, says Merwin.